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Holden employee pricing backfires

19 April 2006

The Australian Competition and Consumer Commission has accepted court-enforceable undertakings offered by GM Holden Ltd in relation to its recent high profile "You Pay What We Pay" advertising campaign.

GM Holden's promotion ran from October to December 2005 amongst much hype that "For the first time ever, all Australians can enjoy the financial benefit of Holden Employee Pricing".

An investigation revealed that GM Holden employees received discounts that were not available to the general public. These included discounts on factory fitted options and accessories as well as a discounted dealer delivery fee.

At the beginning of the advertising campaign, a further special discount of between 25 per cent and 29 per cent was also available to employees but not the general public for selected VZ Commodore variants and WL Statesman and Caprice vehicles. In financial terms, this meant that a consumer who, at the commencement of the promotion, purchased a VZ Commodore Executive sedan with air conditioning as a factory fitted option and a $1,495 dealer delivery charge paid $4,729 more to purchase the car than a Holden employee buying the same car.

GM Holden believed that the inclusion of fine print qualifications regarding options, accessories and dealer delivery fee limited the offer to the baseline price of the vehicle.

ACCC Chairman, Mr Samuel said the ACCC's view was that the headline statement "You Pay What We Pay" was so powerful that no qualification in fine print could undo the message it conveyed to consumers.

After being approached by the ACCC, GM Holden worked co-operatively with the ACCC to resolve its concerns. The ACCC accepted GM Holden's court-enforceable undertakings to:

provide written notice to the consumers who purchased vehicles between 21 October and 9 November 2005 that were subject to the special discount. The notice would offer an opportunity to return the vehicle for a full refund of the purchase price including additional charges

improve its trade practices compliance and have this reviewed by an independent third party, and

use its best endeavours to comply with any industry standards developed by the ACCC aimed at improving the quality, accuracy and availability of information to customers.

"The undertaking given by GM Holden provides a mechanism for redress for between 250 and 300 consumers who did not receive the special discount", Mr Samuel said.

"It also ensures that GM Holden is aware of its obligations under the Trade Practices Act and has in place policies, procedures and systems to ensure it delivers on promises made in its future promotions".

"A new car is probably the second most valuable purchase many Australians are likely to make," Mr Samuel said. "For this reason, the ACCC has been working with motor vehicle manufacturers and dealers for some time to improve advertising practices in the sector*.

"While the ACCC has now seen overall improvement in advertising practices, it will continue to seek improvement where substantive concerns are identified", Mr Samuel said.

"An important message to any one using powerful and novel messages in their advertising as GM Holden did, is that the message communicated by the advertising to consumers and the goods or service ultimately delivered to those consumers must be a perfect match".